RS2 Software plc - Full-Year Results

Tuesday, April 23rd, 2013

On 23 April, RS2 Software plc published its financial statements for the year ended 31 December 2012.

Performance Review

During 2012, the RS2 Group generated a total of €10.6 million in revenue representing a 20.9% increase over the previous year’s comparable figure. The growth in turnover is due to the incidence of higher licence sales to new clients as well as increased service fees generated both from new and existing clients.

Due to the growth in business activity, RS2 also reported a 19% increase in cost of sales to €5.77 million which mainly relates to the Group’s investment in its human resources to service the growing demands of clients. This resulted in an increase in wages. On the other hand, the Group benefitted from savings in commissions as a direct result of the acquisition of the BANKWORKS rights in Scandinavia during the financial year ended 31 December 2011.

This led to a 23.1% increase in the gross profit to €4.9 million with a margin of 45.8% (2011: 45.0%).

Administrative expenses were relatively unchanged at €1.44 million whilst marketing and promotional expenses grew by 52.9% to €0.5 million reflecting the Group’s commitment to increase the BANKWORKS brand recognition. Furthermore, capitalised development costs also increased by 18% to €0.43 million also reflecting the Group’s commitment towards the BANKWORKS platform in terms of continuous upgrades and enhancements of modules and functionalities in order to meet new industry requirements effectively.

Earnings before interest, tax, depreciation and amortising grew by 37.4% to €4.5 million with an EBITDA margin of 42.2% (2011: 37.1%).

RS2 reported an operating profit of €3.2 million representing a 36.2% increase over the previous year’s comparable figure. After accounting for a net interest expense of €78,753 (in contrast to the net interest income of €7,713 registered in 2011), the RS2 Group registered a 32.5% increase in pre-tax profits to €3.15 million.

The RS2 Group incurred a net income tax expense of €0.8 million (2011: €0.1 million). However, this figure mainly comprises the movement in deferred tax asset and does not represent cash payments as the Company continues to enjoy investment tax credits. As a result, net profit increased by 2.6% to €2.48 million.

The balance sheet shows total assets of €27.8 million (+13.3%) reflecting the Group’s investment in its new head office in Mosta as well as increases in trade and other receivables and accrued income on the back of the increased business activity. Shareholders’ funds also grew by 15% to €19.2 million following the profitability registered during the period under review. This translates into a net asset value per share of €0.48.

Outlook     

In the preliminary profit statement the Directors explained that 2013 will be characterised by the continued investment in the newly launched managed services. In this respect, the Directors reiterated that the Group concluded the first managed services contract earlier this year.

Dividend and Bonus Issue

After a 1-year absence, the Directors reinstated a final net dividend of €0.025 per share to all shareholders as at the close of trading on 8 May 2013. The Directors explained that this dividend is aimed to balance the Group’s investment requirements to expand its operations and at the same time to reward shareholders. This dividend is subject to shareholders’ approval during the Annual General Meeting scheduled to be held on 12 June 2013. If approved, the dividend will be paid on 13 June.

The Directors also resolved to recommend a 1 for 16 bonus share issue also to shareholders as at the close of trading on 8 May. The bonus issue will be funded through the capitalisation of €0.5 million from the Share Premium account.

Download

RS2 Software plc – Preliminary Profit Statement for the financial year ended 31 December 2012.

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